Poor Macro Commodity Atmosphere, Short-term PVC Still Operating Under Pressure

Jan 16, 2024

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Yesterday, PVC futures remained in a range of volatility, with some production companies lowering their quotes, creating a strong wait-and-see atmosphere in the market. Currently, Shandong factory produces 5540-5590 yuan/ton; Inner Mongolia factory costs 5230-5270 yuan/ton; Henan factory costs 5550-5650 yuan/ton; Shanxi factory costs 5430-5460 yuan/ton; Hebei factory costs 5470-5520 yuan/ton. Individual shipments of East China ethylene method are reported at 5950 yuan/ton.

Supply side: Most calcium carbide enterprises have normal shipments, and the source of calcium carbide goods is gradually shifting downstream. With the recovery of some preliminary maintenance in the PVC industry and fewer new maintenance, it is expected that there will still be a slight increase in construction this week and it will remain at a high level. The absolute level of short-term PVC social inventory remains relatively high, and there is still an expectation of accumulation in the off-season, with a relatively abundant supply side.

Cost side: Since the weekend, the prices of calcium carbide in many regions have remained stable. Under the increasing supply of calcium carbide and cost pressure from downstream PVC enterprises, it is expected that some regions may still have a slight decrease in calcium carbide prices. External calcium carbide PVC enterprises continue to suffer losses, while chlor alkali enterprises are generally experiencing slight losses. There is a possibility of a slight drop in spot prices of caustic soda in the short term, and there is still some support on the cost side.

On the demand side: During the off-season before the Spring Festival, there is a certain amount of raw material inventory in the downstream and subsequent orders are not good. There is a mentality of buying lower than buying higher, and attention should be paid to whether there is pre year hoarding in the downstream. In the short term, some companies have seen an improvement in their export orders, and attention should be paid to the sustainability of their orders.

Strategy: Short term supply is relatively stable, downstream demand performance is average, fundamentals are expected to be limited, macro commodity atmosphere is poor, short-term PVC is still operating under pressure, and policy expectations will continue to be monitored in the future.